You’ve been together for a long time, and it’s finally time to make it official. You’re planning your wedding, buying a home, and thinking about kids. But you might not be comfortable with the financial aspect of your relationship yet. Engaged couples must ensure their finances are in order since marriage often triggers spending increases.
While some argue that being wed means never having to worry about money again, the truth is that many couples still require significant financial effort. Keeping finances in order can prevent future marital conflicts and serve as a security net in case of divorce.
Here are six finance tips for engaged couples.
1. Set Up a Savings Plan for Your Wedding
One of the most expensive aspects of planning a wedding is the cost of the wedding itself. There’s usually a big expense to getting professional help, and many couples book vendors several months in advance. The total cost of the wedding is usually fixed, so you have less flexibility in increasing your budget. Setting up a savings plan during your engagement period is essential to maintain an adequate budget.
There are several ways you can save for your wedding. You may already have the money budgeted for this purpose. If not, look into several options below to learn how to save for a wedding.
Talk to your financial advisors about creative ways you can save for your wedding, such as a direct deposit into a CD or checking account. This is especially important if you’re on a strict budget.
2. Insure the Engagement Ring
You picked out the perfect ring and spent hours looking at all the different prices. Make sure you have enough insurance to cover the ring.
Your engagement ring insurance should be in place before you travel with your ring. Ensure that the insurance information and policy number are handy if something happens to the ring.
3. Keep Track of Wedding Expenses
Keep track of all wedding expenses and keep receipts. The process of planning a wedding can be costly. You’ll spend more than you think to hire an event planner, photographer, and caterer, so it’s important to adjust your budget accordingly. Use a spreadsheet to keep track of expenses as you accumulate them.
If you’re organizing your wedding and not planning on having any outside help, many free online tools will help you track costs and organize your timeline. Several wedding apps make planning a wedding easier. For example, the Wedding Job app allows you to manage your vendor list and keeps everything together with checkboxes and reminders.
On a bigger scale, you’ll likely want to hire a professional event planner with experience in weddings and catering. Not only will their advice help with your budget, but it can also save you valuable time. They can centralize all the expenditures by giving you an overview of all the costs.
4. Prepare for Financial Changes Post-Wedding
How you spend money will be different after you get married, so your finances should also change. It takes both parties to make financial compromises to reach an agreement that works for both of you. Some agreements include joint checking accounts and credit cards, equal contributions to the household, vacation savings plans, and more.
Maintaining a good financial record during the engagement period is important. You should also discuss how each partner will be held accountable if these changes do not happen.
5. Discuss Whether You Will Merge the Assets
You have the option to combine your assets into a joint account or keep them separated. There are pros and cons for each. If you’re not comfortable with merging all of your accounts, you should at least combine some of them.
Discussing each partner’s income and debt is necessary to decide which accounts should be part of the joint account. The most common merged accounts are checking, savings, credit cards, and retirement funds.
6. Review the Credit Scores
Credit scores are an essential tool for the financial health of couples. If you plan on living in the same household for a long period, you should have a joint credit report. You will also want to ensure that your spouse’s credit history is as good as yours. This is important because if you have poor credit, it will affect your loans and result in increased borrowing costs.
A couple with a good credit score can afford larger loans without incurring higher interest rates.
Conclusion
Ensuring the financial health of engaged couples is all part of a comprehensive plan. If you have trouble keeping on top of these tasks, seek advice from an objective professional. Most advisors can help you get on top of your finances so that it doesn’t affect your wedding plans.